Quinn signs public pension overhaul

Ray Long and Jason GrottoTribune reporters

SPRINGFIELD — Gov. Pat Quinn today signed into law a major crackdown on lucrative public pension abuses that saw top union officials land hefty retirement packages, double dip and substitute teach for one day but win benefits for life.

"The pension abuses unearthed were flagrant. They needed to be stopped immediately and prevented from ever happening in the future," Quinn said in a statement Wednesday. "I'm pleased that the Legislature voted overwhelmingly to address this issue. We look forward to working together in 2012 to tackle the remaining pension challenges that face Illinois."

The law takes effect immediately.

While the reforms may serve as an antidote to a variety of pension problems that Tribune and WGN-TV investigations disclosed during the last year, they could be challenged in court. Opponents argue it's unconstitutional to scale back retirement benefits already in place.

The Democratic governor's signature also won't address the broader issue of Illinois' overwhelming debt caused by years of underfunding the state pension systems. Quinn has said he'll convene a task force to come up with recommendations on how to stabilize and strengthen the pension system.

Major changes like cutting benefits or raising taxes, however, would be a tough sell to jittery lawmakers facing an angry, recession-weary electorate in a year when every seat in the General Assembly is on the ballot.

The Tribune-WGN series published last year exposed a string of pension maneuvers that benefited insiders, outraged the public and prompted lawmakers to take action.

One key goal of the law, which takes effect immediately, is to end the practice in which some city of Chicago municipal and labor union workers have taken leaves of absence from their city jobs, moved to full-time positions with their unions and then collected pensions from both. That double-dip possibility will be eliminated for current and future union officials.

The reforms also mean some current Chicago-area union leaders will be unable to base their public pensions on hefty union paychecks. Instead, their pensions would be calculated on the city salary they had when they left to work for the union, factored for inflation. Those officials already on the books would be allowed to keep counting their years as union employees to rack up public pension credit. Going forward, however, both current and future city employees who leave city jobs to work full time for unions no longer will be able to count union experience toward their pensions.

The changes address a 1991 state law that resulted in at least 23 retired Chicago union officials standing to receive about $56 million from city pension funds over their lifetimes thanks to tweaks made to a few sentences in the state's pension code. At least eight labor leaders eligible for inflated city pensions also were receiving benefits from union pension funds for the same period.

Liberato "Al" Naimoli is one example. The former Streets and Sanitation worker who last worked for the city a quarter-century ago also received contributions toward two union pensions, even as he made $158,000 a year from the city laborers' fund. His public pension isn't based on the $15,000 a year he made as a city worker. Instead, it's pegged to his roughly $300,000 union salary.

The reforms also take aim at a 2007 law that helped two lobbyists for the Illinois Federation of Teachers get into the Illinois Teachers' Retirement System after substitute teaching in Springfield schools for just one day.

Neither Steven Preckwinkle, longtime political director for the teachers union, nor David Piccioli, a fellow lobbyist for the powerful union, had prior teaching experience. But the loophole allowed them to count all of their years working as union employees toward a state teacher pension. The reform would kick them out of the pension system.

During debate on the issue, House Republican leader Tom Cross, of Oswego, who sponsored the reforms, called revelations of the pension games shocking "even by Illinois standards."

If he had taken full advantage of the opportunity, Preckwinkle alone stood to make as much as $108,000 a year when he retired, much higher than the average pension of teachers he represented.

A privately hired spokesman for the two lobbyists has questioned the constitutionality of the law, relying on a long-held belief that public pensions cannot be scaled back in midstream. But sponsoring Sen. Kwame Raoul, D-Chicago, has rejected that argument, saying it is trumped by a provision in the state constitution that "prevents public funds from being used for something that is not in the public good."

Even so, questions remain. After the reform legislation passed, the chief legal counsel of House Speaker Michael Madigan, D-Chicago, underscored constitutional concerns with the reform bill during a House pension committee hearing called for the unusual time of Sunday afternoon in December at the Capitol.

The lawyer, David Ellis, ticked off a series of issues he contended would have problems passing legal muster, including the part that removes the two teacher union lobbyists from the pension fund. In particular, Ellis said, there is a problem because the new reform would mean the prior benefits under the 2007 law would be "retroactively repealed."

"I understand what people are trying to do. I'm not trying to question anyone's motives here, but from a pure constitutional perspective, you can't do that," Ellis told lawmakers. "That violates the constitution, I think, pretty clearly."